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State meets to quell fuel unrest, promise action

James Momanyi @jamomanyi

Members of the executive and National Assembly yesterday heald a crisis meeting with a view to finding a solution to the current fuel crisis that has pushed the government into a tight corner.

The suspension of the tax by the High Court and Parliament’s belated action to suspend the implementation of the 16 per cent  VAT, has thrown Treasury into a spin having already budgeted for the Sh36 billion expected from levying petroleum products in the 2018/19 financial year.

In attendance were Cabinet secretary Henry Rotich, National Assembly Speaker Justin Muturi, leader of Majority Aden Duale, Budget and Appropriations Committee chairman Kimani Ichung’wa, Finance and National Planning chairman Joseph Limo and Attorney General Paul Kihara.

After the closed-door meeting, the Muturi and Rotich said they discussed the VAT crisis with a view to addressing issues raised by Kenyans.

“We met to address the issues you have raised. This is the first meeting and I can assure you that we will address the issue, which is a concern of Kenyans,” said Muturi. Rotich said they will have a series of meetings until the issue is sorted.

A source told People Daily that they met to discuss the Finance Bill 2018 and fine-tune it before it is presented to President Uhuru Kenyatta for assent when he returns from China.

However, the President will also be hesitant to sign the Bill in its current state, without first Parliament either amending the Bill and give a provision on how Treasury will implement this year’s budget without the revenues expected to be raised from VAT on petroleum products.

At the same time, Treasury was thrown into another spin after a High Court in Bungoma granted temporary orders stopping the 16 per cent tax on petroleum products.

The orders were issued by Justice Stephen Riech sitting in Bungoma after hearing a lobby group from Kisumu which said Treasury had flouted constitutional principles by implementing the tax and disregarding amendments to the Finance Bill 2018. The case will be mentioned on September 12.

“Temporary conservatory orders be and are hereby granted quashing the decision by the Kenya Revenue Authority and the Energy Regulatory Commission dated Sptember 1 to implement the Finance (VAT) Act 2013 levying 16 per cent VAT on petroleum products to enable the President to either assent to or reject the amended Finance Bill passed by the National Assembly,” the notice by Justice Riech said.

However, the “Finance (VAT) Act 2013” does not exist and what is currently in contention is the VAT Act 2013.

Yesterday’s meeting in Parliament was occasioned by hue and cry after the implementation of the 16 per cent value added tax (VAT) on petroleum products despite MPs voting last week to postpone it by two more years.

The tax led to a spike of pump prices by at least 12 per cent.  Petrol retail prices  hit Sh28.7 in Nairobi and Sh140 in Mandera.

It also triggered nationwide protests with the Kenya Independent Petroleum Dealers Association announcing an indefinite strike, demanding the shelving of the tax.

Trackers who were delivering petroleum products to petrol stations in Nairobi had to employ the services of police escorts.